The Supreme Court has ruled that a grocery store has the right to challenge a 2011 Federal Reserve decision setting a cap on debit card fees. Corner Post, a North Dakota rest stop, argued that the Fed's cap on debit card fees was higher than the “reasonable” limit set by the 2010 Dodd-Frank Act.

The decision overturned a lower court's 2021 dismissal of Corner Post's lawsuit, arguing that the store missed the six-year statute of limitations that generally applies to such litigation. The Supreme Court noted that under the Administrative Procedure Act, that period does not begin to run until “the plaintiff is harmed by a final action of the agency.”

The North Dakota Retailers Association and the North Dakota Petroleum Marketers Association originally filed the lawsuit, but it was dismissed because it was not within the statute of limitations. The groups then added Corner Post as a party to the suit, arguing that the company had not been harmed by the regulations until the store opened in 2018. The ruling opens the door to future challenges to even long-standing federal regulations simply by recruiting newly formed plaintiffs.

The falling cap

Before the Dodd-Frank Act required the Fed to cap fees on credit card payments, retailers paid up to 44 cents per transaction, making it difficult for small businesses to accept debit cards. The Fed then set the limit at 21 cents per transaction, even though retailers had expected – and hoped – for a much lower cap. In 2015, the Supreme Court upheld a lower court ruling that supported the rule.

Last year, the Fed proposed lowering the current cap to 14.4 cents per transaction, but the National Retail Federation (NRF) suggested the cap should be closer to 10.5 cents per transaction. The fees are set by Visa, Mastercard and other card processing networks.

The decision underscores that the battle over swipe fees is far from over.

“Interchange fees remain a contentious issue for companies, issuers and regulators,” said Elisa Tavilla, director of debit payments at Javelin Strategy & Research. “The Federal Reserve is currently reviewing the more than 2,500 comments it received in response to its proposal to lower the cap to 14.4 cents. Regardless of the outcome, the debates surrounding swipe fees will not be settled anytime soon. It's possible that more cases like Corner Post's will follow suit.”